UK Online Video Viewing continues

to increase

I don’t know about you but I find myself watching more and more video online.  As the data on this chart from comScore Video Metrix shows, I’m not alone in this behaviour.  In the UK in the last three years there has been a fourfold increase in the number of videos viewed online.  But this data may not be an accurate indicator of just how extensive viewing video content on a computer screen has become.  The majority of videos viewed online are still short form content, about three to five minutes long, so the total number of videos viewed is likely to be high. But observing my own behaviour, and that of my family and friends, I find we’re now watching much more long form content as well as short form content. In my case, if I want to catch up with TV news I’m just as likely to watch Al Jazeera from a live feed using YouTube (owned, of course, by Google) on my laptop, as I am to watch it on a TV set.  Part of the reason for this may be because FreeView (the UK’s free digital TV service) limits Al Jazeera broadcasts to four hours daily, from 7pm to 11pm although Al Jazeera broadcasts for 24 hours a day.  Like most TV consumers in the West I want to watch TV News when it’s convenient for me, and not according to somebody else’s schedule, so I’m forced to use my computer to access Al Jazeera via YouTube.  I’m particularly impressed with the fact that I can go to YouTube and watch any of Al Jazeera’s programmes simply by selecting it from a list, and I don’t have to go to any effort to record a programme I want to save.  I can also watch these programmes in HD format so the picture quality is very good and, using Google’s infrastructure (more about this below), the picture doesn’t break-up. With this in mind, I decided to look at what impact this change in viewing behaviour is having on the advertising industry and, in turn, how this is likely to play out for companies like ITV which is the largest commercial TV organisation in the UK.  These thoughts were also triggered by the news last month that Google is planning to test launch a subscription Movie service in the UK.  You can read about this here.  The UK is Google’s second largest source of revenue, after the United States, and it obviously sees the business potential in becoming an even bigger destination for online video. Google is well aware of the commercial importance of the short form videos which currently make up the majority of YouTube’s content, but the long form Movie content will take things to another level. Google will be competing with Amazon’s well-established Lovefilm service which sees its future much more in streaming movies than shipping physical DVDs for people to rent.  Lovefilm may have a large base of existing customers, but if Google goes ahead with a streaming movie service, it will have one great advantage.  Google has invested huge amounts of money in building an impressive infrastructure throughout the UK at a scale that nobody else has managed, apart from British Telecom (BT), who provide the technical backbone for all the country’s Internet services.  In order to speed up response times and to allow “Instant Search” Google has located its servers in many of the local BT telephone exchanges.  Lovefilm simply won’t be able to compete with an established infrastructure so closely integrated in the physical hardware system which delivers Internet services throughout the UK.  As a consequence Google is in the perfect position with the right technology in place to provide smooth streaming of video into UK homes, which just leaves the problem of producing the video and movie content that consumers want.  To that end Google has employed people from Netflix, the dominant US video streaming service, as well as purchasing WideVine, the company who supply the digital rights management technology to Netflix and Blockbuster in the US. It’s surprising but, despite being the dominant commercial broadcaster in the UK, ITV is still struggling to adjust its thinking to cope with the new digital world.  Not one senior ITV executive seems to appreciate how fast the viewing situation is changing.  Perhaps it’s fortunate for the company that the majority of UK advertising agencies have not, so far, favoured online video advertising although that is where the majority of today’s TV audience spends much of its time.  To demonstrate this I used data from the Broadcasters’ Audience Research Board (BARB), the TV industry’s own viewing measurement service.  In a digital world the BARB method of measuring advertising reach seems rather quaint and it hasn’t improved much over the years. This is how it works:  A selected panel of UK TV viewers living in 5,100 homes have a box fitted to their TV sets with a remote metered handset. The idea is that they use the handset to record when they are in the room and actively watching TV. But there are two major flaws in this arcane method of measuring viewing figures:  The first is that the viewing panel is comparatively small – each demographically-selected home apparently represents 55,000 viewers. The second flaw is reliance on human nature which distorts so much research on behaviour:  Several studies, and my own research, show that 50% of TV viewers multi- task while supposedly watching TV. Some people leave their TV sets on permanently for company while they are at home. They may record that they are watching but they might read or email, or walk from room to room, or go about various domestic activities.  During commercial breaks especially many viewers leave the room to make hot drinks, to collect a cold beer, to prepare food and, of course, they also use this time to go to the loo.  So I’m sure you can appreciate that BARB viewing figures can only register a crude approximation of actual viewing figures because of the size of the panel and the reliance that people are actually dutiful in recording their absences and presence in the room.  Yet currently this is the best audience measurement service the TV industry provides and I have used BARB figures for December 2010 for this chart. I chose the month of December, the peak viewing month of the year, because terrestrial TV viewing is highly seasonal and I wanted to have a good comparison with online video viewing.  According to BARB a total of 9.6 million people spent an average of 22 hours watching ITV1, the main UK commercial channel.  In the same month, using comScore Video Metrix data, 35 million people watched an average of 17 hours of online video.  That means that over three times more people watched online video last December than viewed ITV1.  As online video use in the UK has risen fourfold in the last three years, expect online video viewing to continue to rise exponentially, especially if Google launches a UK Movie streaming service. And when the UK’s advertising industry finally realises that much of their TV media buying is based on TV viewing measurements that do not include online viewing as part of an audience viewing mix, expect ITV’s advertising revenue to fall. March 2011
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2011
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UK Online Video Viewing

continues to increase

I don’t know about you but I find myself watching more and more video online.  As the data on this chart from comScore Video Metrix shows, I’m not alone in this behaviour.  In the UK in the last three years there has been a fourfold increase in the number of videos viewed online.  But this data may not be an accurate indicator of just how extensive viewing video content on a computer screen has become.  The majority of videos viewed online are still short form content, about three to five minutes long, so the total number of videos viewed is likely to be high. But observing my own behaviour, and that of my family and friends, I find we’re now watching much more long form content as well as short form content. In my case, if I want to catch up with TV news I’m just as likely to watch Al Jazeera from a live feed using YouTube (owned, of course, by Google) on my laptop, as I am to watch it on a TV set.  Part of the reason for this may be because FreeView (the UK’s free digital TV service) limits Al Jazeera broadcasts to four hours daily, from 7pm to 11pm although Al Jazeera broadcasts for 24 hours a day.  Like most TV consumers in the West I want to watch TV News when it’s convenient for me, and not according to somebody else’s schedule, so I’m forced to use my computer to access Al Jazeera via YouTube.  I’m particularly impressed with the fact that I can go to YouTube and watch any of Al Jazeera’s programmes simply by selecting it from a list, and I don’t have to go to any effort to record a programme I want to save.  I can also watch these programmes in HD format so the picture quality is very good and, using Google’s infrastructure (more about this below), the picture doesn’t break-up. With this in mind, I decided to look at what impact this change in viewing behaviour is having on the advertising industry and, in turn, how this is likely to play out for companies like ITV which is the largest commercial TV organisation in the UK.  These thoughts were also triggered by the news last month that Google is planning to test launch a subscription Movie service in the UK.  You can read about this here.  The UK is Google’s second largest source of revenue, after the United States, and it obviously sees the business potential in becoming an even bigger destination for online video. Google is well aware of the commercial importance of the short form videos which currently make up the majority of YouTube’s content, but the long form Movie content will take things to another level. Google will be competing with Amazon’s well-established Lovefilm service which sees its future much more in streaming movies than shipping physical DVDs for people to rent.  Lovefilm may have a large base of existing customers, but if Google goes ahead with a streaming movie service, it will have one great advantage.  Google has invested huge amounts of money in building an impressive infrastructure throughout the UK at a scale that nobody else has managed, apart from British Telecom (BT), who provide the technical backbone for all the country’s Internet services.  In order to speed up response times and to allow “Instant Search” Google has located its servers in many of the local BT telephone exchanges.  Lovefilm simply won’t be able to compete with an established infrastructure so closely integrated in the physical hardware system which delivers Internet services throughout the UK.  As a consequence Google is in the perfect position with the right technology in place to provide smooth streaming of video into UK homes, which just leaves the problem of producing the video and movie content that consumers want.  To that end Google has employed people from Netflix, the dominant US video streaming service, as well as purchasing WideVine, the company who supply the digital rights management technology to Netflix and Blockbuster in the US. It’s surprising but, despite being the dominant commercial broadcaster in the UK, ITV is still struggling to adjust its thinking to cope with the new digital world.  Not one senior ITV executive seems to appreciate how fast the viewing situation is changing.  Perhaps it’s fortunate for the company that the majority of UK advertising agencies have not, so far, favoured online video advertising although that is where the majority of today’s TV audience spends much of its time.  To demonstrate this I used data from the Broadcasters’ Audience Research Board (BARB), the TV industry’s own viewing measurement service.  In a digital world the BARB method of measuring advertising reach seems rather quaint and it hasn’t improved much over the years. This is how it works:  A selected panel of UK TV viewers living in 5,100 homes have a box fitted to their TV sets with a remote metered handset. The idea is that they use the handset to record when they are in the room and actively watching TV. But there are two major flaws in this arcane method of measuring viewing figures:  The first is that the viewing panel is comparatively small – each demographically-selected home apparently represents 55,000 viewers. The second flaw is reliance on human nature which distorts so much research on behaviour:  Several studies, and my own research, show that 50% of TV viewers multi- task while supposedly watching TV. Some people leave their TV sets on permanently for company while they are at home. They may record that they are watching but they might read or email, or walk from room to room, or go about various domestic activities.  During commercial breaks especially many viewers leave the room to make hot drinks, to collect a cold beer, to prepare food and, of course, they also use this time to go to the loo.  So I’m sure you can appreciate that BARB viewing figures can only register a crude approximation of actual viewing figures because of the size of the panel and the reliance that people are actually dutiful in recording their absences and presence in the room.  Yet currently this is the best audience measurement service the TV industry provides and I have used BARB figures for December 2010 for this chart. I chose the month of December, the peak viewing month of the year, because terrestrial TV viewing is highly seasonal and I wanted to have a good comparison with online video viewing.  According to BARB a total of 9.6 million people spent an average of 22 hours watching ITV1, the main UK commercial channel.  In the same month, using comScore Video Metrix data, 35 million people watched an average of 17 hours of online video.  That means that over three times more people watched online video last December than viewed ITV1.  As online video use in the UK has risen fourfold in the last three years, expect online video viewing to continue to rise exponentially, especially if Google launches a UK Movie streaming service. And when the UK’s advertising industry finally realises that much of their TV media buying is based on TV viewing measurements that do not include online viewing as part of an audience viewing mix, expect ITV’s advertising revenue to fall. March 2011
Click here to download the PowerPoint chart: Click here to download the PowerPoint chart: